Gold 'Bubble' Seen Turning to Bear Market by SocGen on RecoveryBy Nicholas Larkin
Apr. 03, 2013
FACT CHECK: Hillary Said 90% of Clinton Foundation Donations go to Charity. Actual Number? 5.7%
Wikileaks: Hillary Plotted Fake 'Grassroots' Campaign Using Celebs to Con Youth Into Voting for Her
UK: '12yo Refugee' Outed As 21yo Jihadist Threatens To Kill His Foster Mom & Her Kids
'The System IS Rigged!' Pat Buchanan Goes Off On CNN Propagandist!
Jorge Ramos: "The Future of This Country Will be Composed Solely by Minorities," It's "Beautiful"
Gold is in a “bubble” after the best annual run in at least nine decades and will head into a so-called bear market as a stronger U.S. economy helps increase interest rates and cut bullion demand, Societe Generale SA said.
Investors are unlikely to raise gold holdings because inflation has remained low, signs that the economy is improving may spur the Federal Reserve to curb stimulus and the dollar has strengthened, the bank said today in a report. Bullion is down 4.6 percent this year after 12 straight annual gains and would need to drop another 4.8 percent to mark the common definition of a bear market.
Prices fell this year as Fed policy makers debated the pace of asset purchases. Billionaire investor George Soros, who called bullion the “ultimate asset bubble” in 2010, cut his stake in the biggest gold exchange-traded product by 55 percent in the fourth quarter. Goldman Sachs Group Inc. said in February that bullion’s cycle has probably turned as the U.S. economy recovers and Credit Suisse Group AG has said the metal is unlikely to return to the 2011 record of $1,921.15 an ounce.
“The gold price is, in our view, in bubble territory,” Societe Generale analysts including London-based Robin Bhar wrote in the report. “Rising interest rates, driven in part by a positive view of the U.S. economy with an associated improvement in the dollar, could be the perfect storm to start a longer-term bear market.”